November is Small Business Month in NSW and it’s a great time to talk about digital innovation in small businesses.
So what is digital innovation?
We hear the term digital innovation often used to drive business improvement and profitability. But what does it mean? Digital innovation refers to the application of digital technology to existing business problems.
Unpacking this further, we are talking about using technology to address current and future business challenges.
So is digital innovation in small businesses any different to large businesses? A small business often doesn’t have the resources of a large business and hence solutions tend to be undertaken over a shorter period, utilising the current resources of the business. It should be noted though that many large businesses stay large though taking over small businesses that have come up with innovative ideas.
Digital innovation needs to focus on improving our profitability. We need to look to reduce costs or increase sales. The cost of the innovation needs to be less than the savings we achieve or it’s not worth the effort.
What technologies are out there?
There are hundreds of new technologies that might improve our businesses. Some of these you will have heard of and others are household names. Some are relevant to small businesses and others are not. For many of the ones you have heard of, you will end up using them through third-party products, but not directly.
Some of the technologies relevant to small businesses include:
- Interactive websites and Social Media
- Cloud-Based Solutions
- Cyber Security
- Mobile Technologies
Some of the technologies not generally used by small businesses include:
- Artificial intelligence & Machine Learning
- Augmented reality
- Additive manufacturing (3D)
- Digital Twins
Seven steps to achieve digital innovation
As with any business improvement, we can establish a process to achieve digital innovation. We have established a seven-step process to achieve digital innovation in small businesses. It can be shown in the image below. We will discuss each step in turn.
Step 1 – Develop a three-year digital technology roadmap
We need to identify the business problems that we wish to solve. This needs to be aligned with the business or strategic plan if the business has one.
Alternatively, a business improvement plan can be developed on a whiteboard or a page. The different parts of the business process are listed as headings to columns. This might be:
- Marketing and Promotion
- Sales and Quotations
- Project Planning
- Project Delivery
- Project Close Out.
Now down the left-hand column we list:
- A description of the business process and its parts
- The “Inputs” we need to put into that process
- The “Outputs” we get out of that process
- The “Tools and Systems” used
- A list of possible improvements.
We will then work through the table identifying the issues and improvement opportunities in the bottom row. Once you have completed this prioritise all the improvements.
Step 2 – Prioritise the critical business processes to automate
Hopefully, we now have a list of prioritised improvements which should give us focus on the areas of the business that we wish to improve. We can bunch these into groups as it is likely a single improvement will address more than one issue.
Examples might include:
- Launch of New Products & Services
- Deliver better Customer Interface
- Improve Suppliers Interface
- Better Financial Management
- Improve Operations & Service Delivery
Having a good understanding of your needs will assist you to see the opportunities in the technologies being used around you.
Step 3 – Keep up with industry trends and best practices
In order to understand technology options we need to keep up with industry trends and best practices. We can do this in many ways and it is suggested that you:
- Attend technology events and workshops
- Participate in digital forums
- Search and look at reviews of products you are interested in.
- Talk to other businesses or the people next to you about what they are doing.
- Learn what technologies your competitors are using?
Step 4 – Evaluate and right-size the technologies to invest in
We now need to start thinking about the technologies that might assist us in improving these business processes. We need to both look at the technologies we already have as well as other technologies available to us.
If you currently have some technologies or software within your business, you should consider what the current capabilities are. In many cases, software and systems will have improved since you introduced them and updates might be able to address some of your other issues.
Alternatively, the software and systems in your business may be outdated and benefit from being replaced by something that will address other identified issues.
Technology solutions for small businesses might include (but not be limited to):
- Interactive websites
- Cloud solutions
- Mobility solutions
- Data analytics and big data
- Security to become more efficient.
An important issue for small businesses is to start with a realistic budget and scale up accordingly.
Step 5 – Locate the digital talent and skills
One of the most difficult challenges for small businesses is to find the digital talent and skills to be able to implement digital innovation. Unlike larger businesses, small businesses have limited resources both in terms of money and effort to address the implementation of technology.
This will require looking around inside and outside of your business. Do you have an existing staff or business partners with the skills or potential to learn? Have you asked your team if they are interested in assisting?
If you don’t have the skills in-house do any of your existing business partners or industry groups have people that can assist?
If you have found a digital solution to your needs, most platforms have great implementation guides and provide technical support at no charge. This is something you need to understand upfront, prior to any purchases.
Step 6 – Do you need a partner for your journey
If you lack in-house expertise in either the technologies or the business processes a partner might help.
That partner could be an existing provider e.g. your accountant, it could be a business advisor or could be a government-funded support agency like NSW Business Connect.
A service like Nixon Clarity can provide support services for your business innovations on a charge-for-use basis.
Step 7 – Simplify, start small, learn and scale
Small businesses can’t afford wasted resources, neither time nor money. It is important to get the right solution with the least amount of investment.
Any technology that you choose has to be matched with the capacity of your business. We can change the digital processes but often the way we do business needs to change at the same time or we will fail.
Do you have the right culture to be able to change the way you do business? Often small wins build confidence and hence it is important to make your first transformation effective.
A lot of implementations fail due to a lack of time in the implementation phase. This is where you make change successful and you need to stick with the program.
It is good to choose technology that is simple, secure and reliable, and that can grow with you as your business grows. You might not wish to use all the functionality of a product. Don’t be tempted to make a perfect solution, as you will never get there.
Watch out that a “cheap” or free solution doesn’t end up being a high-cost solution. When comparing products, be aware of exchange rates as they can vastly change the affordability of some products.
Success in Digital Innovation.
Digital innovation can change small businesses, you just have to be smart about how you go about it. Start with a solid plan for what you wish to achieve. Follow a process like our seven steps. Find the right people and get small wins.
About David Nixon
David has the skill and experience both as the owner of his own consulting business and as someone who has been around small businesses his entire life to helping see you to the next level of growth.
David has had 30 years’ of engineering management experience across multinationals, utilities, councils, small businesses and start-ups in numerous roles including director, board advisor, chief executive, chief operating officer, consultant, and business advisor.
David is also the author of “Growing Up! Unleash Your Business Growth” 10 Growth Roadblocks Every Business Manager Must Know to Achieve Their Success. He has worked with SMEs, Family Businesses and Governments to unleash business growth by addressing the roadblocks.